The sharemarket ended a promising day in the red as relief gave way to a resumption of fear that interest rates will rise in the US and despite upbeat economic data from China.
Early gains in the market after a speech from US Federal Reserve member Lael Brainard assuaged fears of an imminent rate hike in the US failed to hold through the session. Pessimism returned through the afternoon trade as the US futures market pointed to losses on Wall Street at open.
“Today’s big turnaround on the market suggests to me that traders’ and investors’ nerves are shot, at least for the time being,” Australian Stock Report head of research Chris Conway said.
“After pressing to 12-month highs in August, there now appears to be a distinct lack of confidence in the market, with people believing on balance that the pickup in volatility we have seen of late is far from over.”
Telcos was the hardest hit sector followed by energy, falling with oil prices, which resumed their slide on Tuesday, with Brent crude oil falling to $US47.98 a barrel in the Asian session.
Among the hardest hit stocks were Origin Energy and Santos, down 1.9 per cent, and Oil Search, down 2 per cent.
News Corp and Credit Corp recouped some of their heavy Monday losses, sitting among the best performers, while the best performing sector was consumer discretionary, up 0.7 per cent.
Mr Conway said in the aftermath of a “soft” reporting season, and with the Fed meeting looming, bringing with it the prospect of an interest rate rise had contributed to the market shedding more than 6 per cent since the beginning of August.
“Unfortunately, the selling might still get worse before it gets better,” he said.